powered by
dev mode
Episode
6

An Introduction to Funding

An Introduction to Funding

More episodes

New
Ep
1
What is the Con?
Available soon
New
Ep
2
What will the Con cover?
Available soon
New
Ep
3
An Introduction to Strategy
Available soon
New
Ep
4
An introduction to Commodity
Available soon
New
Ep
5
An introduction to Management
Available soon
New
Ep
6
An Introduction to Funding
Available soon
New
Ep
7
An introduction to Cycles
Available soon
New
Ep
8
An introduction to Resources
Available soon
New
Ep
9
An introduction to Geology
Available soon
New
Ep
10
An introduction to Mining
Available soon
New
Ep
11
An introduction to Mineral Processing
Available soon
New
Ep
12
An introduction to Permitting & Jurisdiction
Available soon
New
Ep
13
Strategy: Dividend Yield
Available soon
New
Ep
14
Strategy: Capital Value Growth
Available soon
New
Ep
15
Strategy: Preserving Capital & High-Grading
Available soon
New
Ep
16
Strategy: Management, Exploration, Discoveries & Culture
Available soon
New
Ep
17
Strategy: The Lassonde Curve
Available soon
New
Ep
18
Strategy: Management Team Roles And Explorers
Available soon
New
Ep
19
Strategy: Developing An Asset, Reporting, Market Cap
Available soon
New
Ep
20
Strategy: Conclusions
Available soon
New
Ep
21
Commodity: My Perspective
Available soon
New
Ep
22
Commodity: Cost Curves and Individual Commodities
Available soon
New
Ep
23
Commodity: Major Miners and Major and Minor Metals
Available soon
New
Ep
24
Commodity: Final Thoughts
Available soon
New
Ep
25
Funding: Confirmation Bias, History, Skin in the Game
Available soon
New
Ep
26
Funding: Historical Financing, Cash Flowing Juniors & Burn Rate
Available soon
New
Ep
27
Funding: Institutional Investing and Private Equity, How Institutional Investing Works
Available soon
New
Ep
28
Funding: Industry Partners, Royalties & Market Cap v NPV And Conclusions
Available soon
New
Ep
29
Jurisdiction: Country Risk and some personal observations from Canada, Australia, Central Asia & Europe
Available soon
New
Ep
30
Jurisdiction: Africa & South America
Available soon
New
Ep
31
Management: Likeability, Strategy & Communication, Skill-Set
Available soon
New
Ep
32
Management: Delivery, Credibility & Confirmation Bias
Available soon
New
Ep
33
Geology: Introduction and Essential Concepts
Available soon
New
Ep
34
Geology: What is Ore? Crustal Abundancies, sampling theory, and project complexity
Available soon
New
Ep
35
Geology: Magnetic Separation & Hydrothermal Orebodies
Available soon
New
Ep
36
Geology: Narrow Veins & Resource Deposits
Available soon
New
Ep
37
Resources: Statements & Natural Resources
Available soon
New
Ep
38
Resources: Inferred Mineral Resource
Available soon
New
Ep
39
Technical Studies: JORC Resource Reports, PEA & PFS
Available soon
New
Ep
40
Technical Studies: DFS & the CEO paradox
Available soon
New
Ep
41
Technical Studies: Moving Data Sets & the McKinsey Mining Study
Available soon
New
Ep
42
Mining: Open-Pit & Underground Mines
Available soon
New
Ep
43
Mining: Mine economics & underground mining methods
Available soon
New
Ep
44
Mining: Mine efficiency
Available soon
New
Ep
45
Mining: Alluvial mining & In-situ recovery
Available soon
New
Ep
46
Mining: General observations
Available soon
New
Ep
47
Mineral processing: Types of rock
Available soon
New
Ep
48
Mineral processing: Crushing, grinding, separation & concentration
Available soon
New
Ep
49
Mineral processing: Processing, hydrometallurgy & pyrometallurgy
Available soon
New
Ep
50
Permitting: Exploration & Mining Licenses
Available soon
New
Ep
51
Permitting: Permit review process
Available soon
New
Ep
52
Permitting: Government & laws
Available soon
New
Ep
53
Permitting: Jurisdictional differences
Available soon

Transcript

Log in to view the episode transcript.

When evaluating a company, the first thing that I look at is the funding. I look up the ticker. I look at how big the company is. I look at how many shares are out, the share price and its cash position. It's fundamental to consider the size of a company, how well-established and how mature it is.

A feature of the resource market is that it's easy to create a company, it is easy to get going, but it's much harder to survive and to thrive.

The smaller companies have got greater rewards associated with them as it's much easier to get a USD$5M company to increase in value to USD$50M, than it is to get a USD$50M company up to USD$500M. You're more likely to get your 10-bagger on a small company, but equally, there's a much greater chance that a smaller company won't thrive. You're going to have more failures, but the few successes you do have will be the bigger reward. It’s a classic risk-reward analysis.

On the funding episode, we will cover:

  • How dilution happens
  • The cash flow of junior companies
  • How they get financed
  • How the management pay themselves
  • Typical capital structures
  • How brokers work with them
  • The compromises and the promises that the smaller companies need to make to institutional investors, private equity and high-net-worth individuals.
  • How deals are made
  • The bargains that have to be made in order to get to the next stage and how to avoid this
  • How some companies can self-fund

An absolutely crucial first step is to look at how is a company evolving. That's for the very junior end of the spectrum, then when one goes through to a more mature company, how is it going to fund the next stage? Where has it got to in terms of its market capital development?

For example, how can a company with a market capitalization of USD$100M, but with a CAPEX requirement of USD$500M-$1Bn for its project navigate that step? What options are available to that company? What are the risks? All of these aspects will be covered in the episode on funding.